By Jiang Jingjing (China Daily)
Updated: 2007-10-17 14:05

Bright Dairy products on sale at a Shanghai supermarket. Groupe Danone SA, the world's largest yogurt maker, has terminated its collaboration with Bright Dairy, after it failed to get the majority stake in the Chinese firm. [China Daily]

Groupe Danone SA, the world's largest yogurt maker, has terminated its collaboration with Bright Dairy, after it failed to get the majority stake in the Chinese firm.

The French company plans to sell its entire 20.01 percent stake in Bright Dairy & Food Co for 934 million yuan to Shanghai Dairy Group and Shanghai Industrial Holdings Ltd, the two largest shareholders of Bright Dairy, the domestic milk producer said yesterday in a statement to the Shanghai Stock Exchange.

Each company will receive 10.005 percent of Bright Dairy shares at a price of 4.58 yuan per share after the transaction is cleared by the China Securities Regulatory Commission and the Ministry of Commerce.

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Danone said in a statement yesterday that after the equity transfer is completed, the relevant business cooperation agreements and the intellectual property license deal between the two parties will be terminated as well.

Danone started its collaboration with Bright Dairy in 2000 through investments. The two companies have cooperated on product development, technology and management, which has worked well in the past years, Danone said.

The Paris-based firm said the decision of equity transfer was reached in view of both parties' development strategies.

Bright Dairy will no longer be restricted by its terms of collaboration after Danone's withdrawal, said Guo Benheng, president of Bright Dairy.

"We'll simplify brand management and focus on making Bright Dairy a leading Chinese brand of fresh milk, yogurt and other dairy products," he told China Business News.

Bright Dairy's parent company, Bright Food (Group) Co Ltd, is seeking overseas strategic investments. An anonymous official was quoted by Caijing magazine as saying that the company signed a letter of memorandum with Goldman Sachs in January.

Some industry insiders said Danone's breakup with Bright Dairy was a matter of time. Danone's strategy was to acquire the largest player in China. Bright Dairy was the market leader in 2002 and 2003, but its market share kept falling in the last three to four years.

Dong Junfeng, an analyst with Galaxy Securities, said Bright's slide from the top position was the main reason for Danone's withdrawal.

In the past 20 years, Danone has bought stakes in Bright Dairy, Shenzhen Health Food Co, Guangdong Robust Group and Shanghai Aquarius Drinking Water Corp.

It is the second biggest shareholder of Hong Kong-listed China Huiyuan Juice Group Ltd, the nation's largest maker of pure fruit drinks, and last December formed joint ventures with China Mengniu Dairy Co, the country's biggest producer of liquid milk.